Gold Loan LTV Raised to 85% by RBI: Final Norms
Why in the news
RBI finalised rules letting lenders finance more of a gold loan, and eased asset norms for microfinance NBFCs.
Key facts
- LTV: 75% to 85% for gold loans under ₹2.5 lakh.
- Experts saw 30-40% of gold loan AUM in larger loans, so a shift to smaller loans was likely.
- NBFC-MFIs get room to diversify into secured products such as gold loans and loan against property.
| NBFC-MFI norm | Earlier | Now |
|---|---|---|
| Minimum qualifying assets | 75% | 60% |
| Maximum non-MFI assets | 25% | 40% |
About LTV
Loan-to-Value is the share of an asset’s value financed by a loan; higher LTV means higher lender risk.
Exam angle
- Regulator: RBI; LTV: 85% below ₹2.5 lakh.
- Related terms: AUM, LAP, small-ticket loans.